TMI Blog2010 (11) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision in s. 80HHC to determine export profit with reference to P and L a/c maintained under the Companies Act, assessees are entitled to deduction of export profit under s. 80HHC and the relief is to be granted in terms of sub-ss. (3) and (3A) of the said section, AO directed to recompute the book profit by granting deduction under s. 80HHC in terms of above findings and the decision of the Supreme Court in Ajanta Pharma Ltd.'s case (2010 (9) TMI 8 - SUPREME COURT) - direction to the AO to recompute the book profit by granting deduction under s. 80HHC. - IT Appeal Nos. 930 and 1525 of 2009, IT Appeal Nos. 1638, 1668 and 1681 of 2009 - - - Dated:- 30-11-2010 - C.N. Ramachandran Nair, Bhabani Prasad Ray and P.N. Ravindran, JJ. P.K.R. Menon and Jose Joseph for the Revenue Joseph Markose with P. Balakrishnan, Joseph Kodianthara and Terry V. James for the Assessee JUDGEMENT C.N. Ramachandran Nair, J:- 1. In these appeals filed by the Revenue, the only question raised is whether the assessees are entitled to deduction under s. 80HHC in the computation of book profit under s. 115JB of the IT Act. Even though in respect of one assessee, the provision invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are entitled to deduction of the entire eligible export profit computed under s. 80HHC of the Act. In other words, standing counsel contended that in the computation of book profit, deduction under s. 80HHC should be considered by applying the provisions of s. 80AB and s. 80B(5), etc., of the Act. Therefore according to him, if the total income computed before considering the claim of deduction under Chapter VIA-C is a negative figure then the assessees shall not be entitled to deduction under s. 80HHC at all. His contention is that in the case of all the assessees herein carried forward business loss and depreciation from previous years are such that gross profit, after setting off the same from the gross total income, is a negative figure which disentitles the assessees for deduction under any of the provisions of Chapter VIA-C of the Act. Therefore the contention of the Revenue is that assessees are not entitled to deduction under s. 80HHC of the Act, even in the computation of book profit for assessment. 4. The short question arising for consideration therefore is whether the assessees whose gross total income after setting off business loss and depreciation carried forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation or Explanation below second proviso to s. 115JA, as the case may be; or (ii) the amount of income to which any of the provisions of s. 10 or s. 10A or s. 10B or s. 11 or s. 12 apply, if any such amount is credited to the P and L a/c; or (iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account,- Explanation:- For the purposes of this clause,- (a) the loss shall not include depreciation; (b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation, is nil, or (iv) the amount of profits eligible for deduction under s. 80HHC, computed under cl. (a) or cl. (b) or cl. (c) of sub-s. (3) or sub-s. (3A) as the case may be, of that section, and subject to the conditions specified in that section; or, (v) the amount of profits eligible for deduction under s. 80HHE computed under sub-s. (3) or sub-s. (3A), as the case may be, of that section, and subject to the conditions s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15JB of the Act. 5. After hearing both sides and after going through the decisions above-referred, particularly that of the Supreme Court, we feel that assessees are entitled to deduction under s. 80HHC computed in accordance with sub-ss. (3) and (3A) of s. 80HHC of the Act because it is expressly so provided under cl. (iv) of s. 115JB(2) of the Act. All what the Supreme Court has held is that the ceiling contained in s. 80HHC(1B) is not applicable for the purpose of granting deduction under cl. (iv) above in the computation of book profit. However, there is nothing to indicate in the Supreme Court decision that eligible deduction of export profit under cl. (iv) above in the computation of book profit can be computed in any other manner other than what is provided in sub-ss. (3) and (3A) of s. 80HHC of the Act. What is clearly stated in cl. (iv) is that deduction of export profit in the computation of book profit is the same "amount of profit eligible for deduction under s. 80HHC" computed under cl. (a) or cl. (b) or cl. (c) of sub-s. (3) or sub-s. (3A) of the said section. So much so, computation of export profit has to be done only in accordance with the method provided under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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